February 16, 2012
- in Uncategorized by schooloftrade
Dollar index day trading strategy
The dollar index moved higher on Wednesday due to news
chatter from china regarding support for the recovery and optimism over the
bailout in greece. This morning we find
the dollar index trading above the highs from Wednesday in what we call an ‘outside
day’ which means if price keeps moving higher we will buy pullbacks, however,
we will be watching if the dollar index falls back below the PHOD which will
signal buyers failure and the sellers will push price much lower, trying to re-test
the PLOD. Keep an eye on the overhead
resistance starting at 80.245 up to 80.655 and if price drops below 80.020 look
for this market to sell off down to the support below at 79.550 area and
potential down to the PLOD 79.200 by end of the week.
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| Dollar Index Day Trading Strategy |
Its vital that we understand the dollar index correlation
when looking at this chart because we don’t trade the dollar index we use its
correlation, so when price stalls at this resistance and turns over and goes
lower we will look for the opposite to occur on markets we trade most such as crude
oil, gold futures, and euro. Remember to
look for the dollar index around levels of support and resistance as we call
them ‘turning points’ and they will be the best times to look for trades. Also remember that price may NOT reverse at
resistance, it may keep going through, and either way, we get a trading opportunity. If price moves through resistance with
strength we know that the dollar index is strong and therefore we will look for
selling opportunities on other markets. If the resistance holds we know to
expect a reversal looking for buying opportunity on the markets we trade.
when looking at this chart because we don’t trade the dollar index we use its
correlation, so when price stalls at this resistance and turns over and goes
lower we will look for the opposite to occur on markets we trade most such as crude
oil, gold futures, and euro. Remember to
look for the dollar index around levels of support and resistance as we call
them ‘turning points’ and they will be the best times to look for trades. Also remember that price may NOT reverse at
resistance, it may keep going through, and either way, we get a trading opportunity. If price moves through resistance with
strength we know that the dollar index is strong and therefore we will look for
selling opportunities on other markets. If the resistance holds we know to
expect a reversal looking for buying opportunity on the markets we trade.
Looking at the short term timeframe on the dollar index we
can see a medium term bull price channel with a short term trend of sloppy and
sideways just above Wednesday’s highs.
Look for price to move higher to the top of the price channel and then
reverse back down, OR look for price to move lower and drop into the range
below us from Wednesday. Key here is
getting below 79.920 and if we do expect prices to move HIGHER on crude oil,
euro, gold and E-Mini-Russell futures as we drop back to more support levels
below and potentially down to the PLOD by end of Friday OPEX.
can see a medium term bull price channel with a short term trend of sloppy and
sideways just above Wednesday’s highs.
Look for price to move higher to the top of the price channel and then
reverse back down, OR look for price to move lower and drop into the range
below us from Wednesday. Key here is
getting below 79.920 and if we do expect prices to move HIGHER on crude oil,
euro, gold and E-Mini-Russell futures as we drop back to more support levels
below and potentially down to the PLOD by end of Friday OPEX.
